Brian S. Kern & N.J. Physicians United Reciprocal Exch. v. Med. Protective Co.

BRIAN S. KERN and NEW JERSEY PHYSICIANS UNITED RECIPROCAL EXCHANGE, Plaintiffs, v. THE MEDICAL PROTECTIVE COMPANY, INC.d/b/a PRINCETON INSURANCE COMPANY and DOES 1-10, Defendants.

Civil Action No. 13-02286-BRM-TJB

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

September 20, 2018

NOT FOR PUBLICATION

OPINION

MARTINOTTI, DISTRICT JUDGE

Before this Court is The Medical Protective Company Inc., d/b/a Princeton Insurance Company's ("Princeton") Motion for Summary Judgment. (ECF No 145.) Plaintiff New Jersey Physicians United Reciprocal Exchange ("NJ PURE") opposes the Motion. (ECF No. 146.) Having reviewed the submissions filed in connection with the Motion and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and for good cause shown, Princeton's Motion for Summary Judgment is GRANTED.

I. BACKGROUND

This case is based on Princeton's allegedly misleading publication of its Princeton Marketplace Updates from 2005 to 2012. (See ECF No. 1.)

A. The Parties and Princeton's Marketplace Updates

NJ PURE is a New Jersey not-for-profit reciprocal insurance exchange entity that sells medical malpractice insurance directly to medical providers. (Princeton's Statement of Facts (ECF No. 145-1) ¶ 1 and NJ PURE's Resp. to Princeton's Statement of Facts (ECF No. 146-4) ¶ 1.) Princeton sells medical malpractice insurance in New Jersey. (ECF No. 145-1 ¶ 2 and ECF No. 146-4 ¶ 2.)

As required by insurance policies in New Jersey, both NJ PURE and Princeton submit financial information to the New Jersey Department of Banking and Insurance ("DOBI") on an annual basis, which is known as an "Annual Statement." (ECF No. 145-1 ¶ 3 and ECF No. 146-4 ¶ 3.) From 2005 to 2012, on an annual basis, Princeton created a publication entitled "Marketplace Update- Prepared for Authorized Agents of Princeton Insurance- [Year]" (the "Princeton Marketplace Updates"). (ECF No. 145-1 ¶ 4 and ECF No. 146-4 ¶ 4.) The Princeton Marketplace Updates contained a chart on the first page demonstrating certain financial indicators for named companies, including but not limited to, NJ PURE and Princeton, that sold medical malpractice insurance in New Jersey. (ECF No. 145-1 ¶ 6 and ECF No. 146-4 ¶ 6.) Some of the information that appeared in the Princeton Marketplace Updates were taken directly from the Annual Statements filed by each company annually to the DOBI, but not all. (ECF No. 145-1 ¶ 7 and ECF No. 146-4 ¶ 7.) The Princeton Marketplace Updates also contained narrative information regarding the financial indicators that appeared in them. (ECF No. 145-1 ¶ 9 and ECF No. 146-4 ¶ 9.)

However, the Princeton Marketplace Updates do not disclose that NJ PURE is a not-for-profit insurance company, while Princeton is for-profit. (ECF No. 146-3 ¶ 4 and ECF No. 147-1 ¶ 4.) NJ PURE alleges this distinction is significant because the Princeton Marketplace Updates described net income as determinative of the insurer's surplus but NJ PURE's surplus contributions are not considered in calculating net income because it is a not-for-profit entity. (ECF No. 146-3 ¶¶ 9-10.) Therefore, NJ PURE alleges the Marketplace Updates advertise that NJ PURE suffered a net loss in four out of the seven years the Princeton Marketplace Updates published,which is not accurate. (Id. ¶ 11.) Notably, Princeton's Marketplace Updates do not state the organizational structure of any insurer. (ECF No. 147-1 ¶ 4.)

The 2012 Princeton Marketplace Update, for the first time, contained an A.M. Best & Company rating category, which the parties admit was accurate. (ECF No. 145-1 ¶ 7 and ECF No. 146-4 ¶ 7.) The A.M. Best & Company is an entity that provides ratings "on financial stability of insurers and the insurance industry," providing ratings ranging from A++ to D. (ECF No. 145-1 ¶ 11 and ECF No. 146-4 ¶ 11 (citation omitted).) Not all companies make the A.M. Best & Company ratings.

The Princeton Marketplace Updates did not always portray Princeton with the best Loss/LAE Ratio or NJ PURE with the worst Loss/LAE Ratio. (ECF No. 145-1 ¶ 8 and ECF No. 146-4 ¶ 8.) In fact, NJ PURE's Loss/LAE Ratio is lower than, i.e. better than, Princeton's number in 2007, 2010, 2011, and 2012. (Id.) Princeton distributed its Princeton Marketplace Updates to its producers every year. (ECF No. 145-1 ¶ 10 and ECF No. 146-4 ¶ 10.)

In 2004, Princeton lost its A.M. & Company best rating. (ECF No. 145-1 ¶ 12 and ECF No. 146-4 ¶ 12.) This led to Princeton's creation of the Marketplace Updates to illustrate its financial situations for potential purchasers of its insurance in 2005. (ECF No. 145-1 ¶ 13 and ECF No. 146-4 ¶ 13.) In 2012, Princeton again became A.M. Best Rated and ceased producing and publishing the Princeton Marketplace Updates. (ECF No. 145-1 ¶ 15 and ECF No. 146-4 ¶ 15.)

In 2010, NJ PURE wrote a letter to DOBI complaining about the Princeton Marketplace Updates and requesting that DOBI stop Princeton from publishing it. (ECF No. 145-1 ¶ 19 and ECF No. 146-4 ¶ 19.) However, no letter was sent to Princeton at this time. (Id.) In 2011, DOBI issued Bulletin 11-01 to "all authorized or admitted property and casualty insurers" stating in part, "if an advertisement includes financial information of competitors, such as surplus, assets orpremium, the same information must be presented for the advertising insurer." (ECF No. 145-1 ¶¶ 22-23 and ECF No. 146-4 ¶¶ 22-23.) The parties agree that "[e]very Princeton Marketplace Update included financial indicators of medical malpractice insurers in New Jersey including, among other things, surplus, assets and premium information, and every Princeton Marketplace Update also presented that same financial indicator for Princeton for the same year." (ECF No. 145-1 ¶ 25 and ECF No. 146-4 ¶ 25.) Irrefutably, "virtually every sentence" contained in the Princeton Marketplace Updates "probably could be construed as true." (ECF No. 145-1 ¶ 26 and ECF No. 146-4 ¶ 26.)

B. NJ PURE's Lawsuits Against Other Producers of Medical Malpractice Insurance

On September 7, 2012, NJ PURE filed a complaint against Boynton & Boynton, Inc. ("Boynton") and Kevin Byrne ("Byrne") (the "Boynton Action" and the defendants there collectively the "Boynton Defendants"). (ECF No. 145-1 ¶ 28 and ECF No. 146-4 ¶ 28.) The second amended complaint in the Boynton Action alleges the Boynton Defendants made "false written and oral statements to the public" regarding NJ PURE's financials. (ECF No. 145-1 ¶ 31 and ECF No. 146-4 ¶ 31.) It also alleges the Boynton Defendants distributed the Princeton Marketplace Updates, as well as different marketplace updates that were created and published by Boynton. (Id.)

Boynton produces medical malpractice insurance in New Jersey and Byrne was one of its employees. (ECF No. 145-1 ¶ 29 and ECF No. 146-4 ¶ 29.) Unlike Princeton, NJ PURE does not use producers to sell their medical malpractice insurance products. (ECF No. 145-1 ¶ 30 and ECF No. 146-4 ¶ 30.)

In the Boynton Action, Eric Poe's, NJ PURE's Chief Operating Officer, who previously held the title of NJ PURE's Chief Marketing and Business Development Officer, declarationasserted that University Radiology Group ("URG") "expressed an interest in purchasing medical malpractice insurance from NJ PURE" in 2012. (ECF No. 145-1 ¶ 33 and ECF No. 146-4 ¶ 33 (citation omitted).) Poe also stated that URG expressed concerns regarding "NJ PURE's A.M. Best[] rating and NJ PURE's reinsurer" and that URG's concerns were identical to statements contained in emails sent by Byrne to other physician groups. (ECF No. 145-1 ¶ 34 and ECF No. 146-4 ¶ 34.) Poe declared "as a result of these false allegations . . . [URG] chose not to continue pursuing purchasing a policy from NJ PURE." (ECF No. 145-1 ¶ 35 and ECF No. 146-4 ¶ 35 (citation omitted).)

On May 16, 2013, NJ PURE sent cease and desist letters to five different producers of medical malpractice insurance in New Jersey The NIA Group, PRiMed Consulting, Bollinger Insurance Solutions, MBS Insurances Services, Inc., and Cornerstone Professional Liability Consultants for making derogatory remarks regarding NJ PURE. (ECF No. 145-1 ¶¶ 36-37 and ECF No. 146-4 ¶¶ 36-37.)

C. NJ PURE's Allegations Against Princeton

On April 10, 2013, NJ PURE filed a Complaint against Princeton, alleging: (1) unfair competition under the Lanham Act; (2) trade libel; (3) libel; (4) libel per se; (5) tortious interference with prospective contractual relationships; and (6) unfair methods of competition and unfair or deceptive acts or practices under the New Jersey Insurance Trade Practices Act. (ECF No. 1.) NJ Pure alleges that because of the Princeton Marketplace Updates it suffered "pecuniary harm in the form of loss of former medical malpractice liability policyholders, delays in obtaining new medical malpractice liability policyholders and the loss of prospective contracts with potential medical malpractice liability policyholders." (Id. ¶¶ 70-71.) NJ PURE also sought a permanent injunction to prevent Princeton from publishing its Princeton Marketplace Updates. (ECF Nos. 1-2 and 1-3.) On April 19, 2013, the Court denied NJ PURE's request for injunctive relief. (ECF No. 6.) NJ PURE's Motion for Reconsideration of the denial of its Motion for Injunctive Relief was denied on February 26, 2014. (ECF No. 50.)

D. NJ PURE's Lost Business

On September 15, 2017, NJ PURE filed a revised economic report conducted by Michael Soundry (the "Soundry Report") calculating NJ PURE's alleged economic losses because of the conduct of both Princeton and the Boynton Defendants. (ECF No. 145-1 ¶ 53 and ECF No. 146-4 ¶ 53.) NJ PURE concedes the Soundry Report "does not state that any particular economic loss claimed by NJ PURE was due solely to Princeton's Marketplace Updates." (ECF No. 145-1 ¶ 54 and ECF No. 146-4 ¶ 54.) Instead, the Soundry Report calculates damages allegedly caused by a combination of factors the different marketplace updates that were created and...